UPDATE 1-Britain's Rentokil to offload pension risks to PIC

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(Adds details on deal, UK’s bulk annuity market)

Dec 4 (Reuters) - Rentokil Initial Plc will offload pension liabilities of 1.5 billion pounds ($1.91 billion) to Pension Insurance Corp (PIC), the British pest control company said on Tuesday, a deal that would allow it to tap surplus funds.

The bulk annuity insurance “buy-in” allows Rentokil to transfer pension risks for some 14,200 members, and such deals are increasingly common as companies seek to offload pension obligations that otherwise sit on balance sheets, limiting their financial options.

British companies are expected to try and offload a record amount of risk linked to their pension schemes in 2019 as growth in life expectancy eases and interest rates rise, making deals more attractive for insurance firms.

The “buy-in” signed by Rentokil has been agreed in anticipation of a full “buy-out” of the scheme, the FTSE-100 group said. That would likely be completed in 2020, it added.

“The buy-out will completely extinguish all future pension liabilities from the company’s balance sheet and the associated accounting surplus - with no company cash payments being necessary,” the firm said in a statement.

Deals to shed part or all of the liability to specialist insurers are expected to total a record 21.5 billion pounds ($27.50 billion) by year-end, smashing a previous record of 14 billion pounds, but 2019 could be even better. ($1 = 0.7849 pounds) (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sai Sachin Ravikumar)